DISP 1.2 Internal complaint handling procedures: general requirements

Firms are not obliged to restrict their internal complaint handling procedures to expressions of dissatisfaction from eligible complainants. They may, if they wish, also establish procedures for handling complaints from other customers.

The internal complaint handling procedures should provide for:

1. (1)

   receiving complaints;

2. (2)

   responding to complaints;

3. (2A)

   referring complaints to other firms;4

4. (3)

   the appropriate investigation of complaints; and

5. (4)

   notifying complainants of their right to go the Financial Ombudsman Service where relevant.

When deciding what constitutes an appropriate complaint handling procedure (see DISP 1.2.1 R), a firm should have regard to:

1. (1)

   the type of business it undertakes;

2. (2)

   its size and organisational structure;

3. (3)

   the nature and complexity of the complaints it is likely to receive; and

4. (4)

   the likely number of complaints it will receive and have to investigate.

1. (1)

   DISP 1.2.1 R does not prevent the use of a third party administrator for the purposes of handling complaints.4

2. (2)

   It is acceptable for two or more firms to set up arrangements, such as a one-stop shop for complaints handling under a service level agreement, provided that this still secures for complainants an equivalent standard of service and, if appropriate, redress. Any such arrangements should be made clear to an eligible complainant.4

In establishing their internal complaint handling procedures, firms may wish to take account of BS ISO 10002:2004 'Quality management. Customer satisfaction. Guidelines for complaints handling in organizations'. This is available from BSI. To purchase copies contact them directly on 020 8996 9001 or orders@bsi-global.com.

The internal complaint handling procedures should enable complainants to make a complaint by any reasonable means (for example, letter, telephone, e-mail or in person).

The requirements in DISP 1.2.9 R(1)-(3) relate to the internal complaints procedures required by DISP 1.2.1 R.

In order to comply with DISP 1.2.9 R(1), a firm may include reference to its complaint handling procedures in contractual documentation, for example:3

1. (1)

   (where the firm is subject to the requirements in COB) in a terms of business letter, key features document or client agreement;3

2. (2)

   (where the firm is subject to the requirements in ICOB), as part of status disclosure (see ICOB 4.2 and ICOB 8.3), in a policy summary or policy document; or3

3. (3)

   (where the firm is subject to the requirements in MCOB) in an initial disclosure document or offer document.3

Where a complaint is also subject to the more detailed requirements in DISP 1.4 - DISP 1.6, the firm may send out a copy of its complaint handling procedures (as required by DISP 1.2.9 R (2)) at the same time as the acknowledgement required by DISP 1.4.1 R.

For the purposes of satisfying DISP 1.2.9 R(2) a firm may wish to produce a leaflet which summarises its internal complaint handling procedures.

Firms' literature and correspondence relating to complaints should be in clear and plain language.

A firm may also, if it wishes to do so, disclose the fact that it is covered by the Financial Ombudsman Service by including the Financial Ombudsman Service logo in any marketing literature or correspondence directed at eligible complainants, provided that it does so in a way which is not misleading.

In deciding whether or not to accept a complaint and what would be appropriate redress, firms may wish to consider any relevant guidance published by the FSA, the Financial Ombudsman Service or by any of the former schemes.

Appropriate redress will not always involve financial redress. It may, for example, simply involve an apology. Where financial redress is deemed appropriate, it may include a reasonable rate of interest.

DISP App 2 contains guidance to firms on the approach to assessing financial loss and appropriate compensation in circumstances where a firm regards a complaint in relation to the sale of an endowment policy (which is sold for the purposes of repaying a mortgage) as justified.